Lamb, Hair, McDaniel

2012-2013

CHAPTER 3 Ethics and Social Responsibility

2013 by Cengage Learning Inc. All Rights

Chapter 1 Copyright 2012 by Cengage Learning Inc. All rights reserved Reserved.

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Ethical Behavior
The moral principles or values that generally govern the conduct of an individual or a group.
Example: There is no law for cutting in line. Cutting in line would anger most other people.

2013 by Cengage Learning Inc. All Rights Reserved.

Ethical Behavior in Business

Ethics The moral principles or values that generally govern the conduct of an individual. The rules people develop as a result of cultural values and norms.

Morals

Morals involve good and bad as well as deviant behaviors

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2013 by Cengage Learning Inc. All Rights Reserved.

Ethical Development Levels

More Childlike Preconventional
Morality
Based on what will be punished or rewarded Self-centered, calculating, selfish Moves toward the expectations of society Concerned over legality and the opinion of others Concern about how they judge themselves Concern if it is right in the long run

Conventional Morality

More Postconventional Morality Mature

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Dell: An Ethics Case

Documents from a lawsuit revealed that Dell shipped over 11.8 million faulty computers between 2003 and 2005. An internal investigation revealed extensive problems, but Dell tried to cover up the problem, telling its sales team not to mention bring it up. Dell at times used faulty components to fix broken computers. Dell took a $300 million charge to fix the computers, but only in response to stakeholder demands. At what level of ethical development is Dell operating?

2013 by Cengage Learning Inc. All Rights Reserved.

Ethical Decision Making

Influential Factors
Extent of Problems Top Management Actions
Potential Consequences

Probability of Harm Time Until Consequences

Number Affected

Social Consensus
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2013 by Cengage Learning Inc. All Rights Reserved.

Creating Ethical Guidelines

A Code of Ethics:
Helps identify acceptable business practices Helps control behavior internally Avoids confusion in decision making Facilitates discussion about right and wrong

2013 by Cengage Learning Inc. All Rights Reserved.

iStockphoto.com/Steve Cady

American Marketing Association

Has a Statement of Ethics Here is the link
http://www.marketingpower.com/AboutAMA/ Pages/Statement%20of%20Ethics.aspx

Ethics in Other Countries

Foreign Corrupt Practices Act (FCPA)

Prohibits U.S. corporations from making illegal payments to foreign officials.

Has been criticized for putting U.S. businesses at a disadvantage. Has encouraged some countries to implement their own anti-bribery laws.
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2013 by Cengage Learning Inc. All Rights Reserved.

Corporate Social Responsibility

Pros Cons

It is the right thing to do Businesses have the resources to devote to fixing social problems Prevents government regulation and potential fines It can be profitable

Takes focus away from making profits Business executives spend shareholder money on environmental initiatives

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Sustainability
Socially responsible companies will outperform their peers. It is in businesss best interest to find ways to attack societys ills.

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2013 by Cengage Learning Inc. All Rights Reserved.

Exhibit 3.1
Pyramid of Corporate Social Responsibility

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2013 by Cengage Learning Inc. All Rights Reserved.

Growth of Social Responsibility

According to a recent study, the percentage of firms that consider social responsibility factors when making business decisions:
Brazil Canada Australia United States India China Mexico
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62% 54% 52% 47%

38% 35% 26%

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Green Marketing
The development and marketing of products designed to minimize negative effects on the environment or improve the environment.
Environmentally aware customers pay more for products Companies must try to educate customers of environmental benefits
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2013 by Cengage Learning Inc. All Rights Reserved.

Segments Based on Environmental Activism

True Naturals (11%) New Green Mainstream (17%) Affluent Healers (11%) Young Recyclers (14%) Overwhelmed (22%) Unconcerned (25%)

True Naturals (11%)

Express deeply felt environmental concerns and tailor their actions and purchases to these beliefs

New Green Mainstream (17%)

Concerned about the environment but alter their actions only when convenient

Affluent Healers (11%)

Most concerned about environmental issues that relate to their personal health Are less inclined to consider the environment when shopping

Young Recyclers (14%)

Most concerned about environmental issues that relate to solid waste Are less inclined to consider the environment when shopping

Overwhelmed (22%)
Feel too caught up in lifes demands to worry about the environment Unlikely to favor a product for environmental reasons

Unconcerned (25%)
Do not pay attention to environmental issues Or do not feel that the environment is seriously threatened

Environmentally Aware Advertising

The Blog Oddee has gathered some of the most creative environmentally aware campaigns:

http://www.oddee.com/item_96818.aspx
Denver Water Authoritys campaign gets the conservation word out in creative ways:

http://www.denverwater.org/Conservation/ UseOnlyWhatYouNeed/PhotoGallery/#14

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Cause-Related Marketing
For-profit and non-profit organizations cooperate to generate funds. generates about $7 billion annually Too many causes cause customer cause fatigue

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2013 by Cengage Learning Inc. All Rights Reserved.